Trade and industry decry costly electricity

KARACHI: Trade and industry people have asked the government to seriously look into the matter of high electricity tariffs for all categories of consumers, particularly export and general industries, and rationalise the same to bring down the cost of production.

SITE Association of Industry President Muhammad Kamran Arbi said there is much unrest amongst the business community due to high electricity bills.

The high energy tariff is fast making local goods uncompetitive on international markets against competitors particularly Bangladesh, India, Indonesia, Vietnam and Egypt.

He said the contracts signed with independent power producers (IPPs) are the root cause of exorbitant power tariffs. Capacity payments have crossed alarming levels already without any significant addition in electricity consumption. This burden is being transferred to consumers who are already crumbling under the weight of high inflation and is squeezing them further. The agreements signed with IPPs have now become a question of survival for the entire nation,

Mr Arbi appealed to the prime minister, finance minister and energy minister to immediately look into the matter and take urgent remedial measures in the larger interest of the nation.

Pakistan Yarn Merchants Association Chairman Sheikh Khalil Qaiser urged the government to reconsider contracts with the IPPs in the interest of the economy, besides calling for the cancellation of these contracts as high power tariffs have devastated the local textile and export-oriented industries.

The textile sector is already grappling with unsustainable costs due to elevated energy tariffs. They warned that additional capacity charges imposed by the IPPs could force many industries to cease operations, he said.

He said the IPPs have received substantial payments despite minimal electricity generation, thus raising questions over the transparency of governance. The current contracts obligate the government to purchase electricity at Rs750 per unit from certain IPPs which alleviates concerns within the business community.

He stressed the need for lowering electricity and gas rates by revisiting contracts with the IPPs to ensure uninterrupted industrial activity and foster economic growth.

The standing committee on energy of the Federation of Pakistan Chambers of Commerce and Industry, under the chairmanship of Malik Khuda Bakhsh, in an emergency meeting said the entire burden has been placed on the public to favour 40 IPPs. In the country, 25pc of the IPPs are closed, and these closed IPPs are receiving monthly payments of Rs10bn, causing the national kitty to sink further into crisis. Additionally, IPPs are charging capacity payments of Rs24 per unit even for unused electricity.

The committee, while vehemently demanding an immediate review of these capacity charges,

unanimously passed a joint resolution condemning the high electricity charges and urged the government to immediately revisit the agreements with IPPs to reduce charges.

They also considered terminating the agreements with IPPs that failed to reduce their charges. The committee demanded swift action from the government to ensure a sustainable and affordable energy supply for industries and the general public, which is crucial for Pakistan’s economic stability and prosperity.

Published in Dawn, July 23rd, 2024